Spot a Binary Options Scammer a Mile Away!

There are many reports circulating about the risks of binary options trading. It should be remembered that risk is an unavoidable fact of life. When you make the decision to trade financial instruments, you are assuming a certain level of risk. However, it is also true that without risk there is no reward. As a new binary options trader, you will be faced with many exciting opportunities. A wide range of tradable assets is available to you and you will need to decide where you would like to invest your hard-earned money. Remember that the investment opportunities are endless, but your money isn't so you will have to do a little homework before you get started.

Before we go any further, let’s set the record straight on the big question: Is Binary Options Trading a Scam?

First and foremost it must be pointed out that binary options trading is not a scam. With this form of trading, there are two potential outcomes, and only two potential outcomes. You are either in the money or you're out of the money. The process of trading binary options is simple.

  • Register at a trusted binary options broker
  • Make a deposit and claim your welcome bonus
  • Choose your preferred tradable asset
  • Select the amount that you wish to trade
  • Choose the expiry time of your trade
  • Place a call option if you believe the assets price will rise above the strike price at expiry time, or a put option if you believe the price will fall at expiry time
  • Wait for the trade to expire

By and large, these are the typical steps that traders follow at binary options brokers. As you can imagine, you can generate substantial profits if your forecasts are correct. Some binary options brokers offer clients cashback on losing trades. The amount is not substantial, but it can be up to 10% of the trade amount.

Why Are Rumours of Binary Options Scams so Prevalent?

For many people, the default response to losing money is to cry scam! However, investments always have two potential outcomes – in the money or out of the money. It is incumbent upon the trader to investigate – to the best of his/her ability – the underlying asset, and the factors that can influence its price. Sometimes, traders assume that binary options brokers are scams simply because they fail to read the terms and conditions of the bonuses and promotional offers. If you take the time to read through the terms and conditions, you will see that there are wagering requirements attached to every bonus offer. These need to be met before any money can be withdrawn from your trading account. We should also be very mindful of those traders who have in fact been scammed by binary options brokers. It does happen, but you can guard against it by being vigilant and informed. Here are a few tips to avoid being scammed by shifty binary options brokers:

  • If the offer seems too good to be true – it is – avoid that binary options broker
  • Low risk, low return brokers are less likely to be scam artists
  • Check to see if the binary options broker is licensed and regulated
  • Conduct your own research, read reviews and talk to other people about the broker in question
  • Don't be too swayed by overly negative opinions, or overly positive opinions – the truth is somewhere in the middle
  • Check to see if the binary options broker has a physical address, not only a virtual address
  • Contact customer service before you invest any money, to be sure that they are highly responsive to your needs
  • Check to see if there is a practice trading platform – it's always a great benefit for new traders
  • Explore the educational resources, blog, webinars, expert analysis and other features available at the binary options broker – the more the better

As you can see from the above, there are many factors that you should consider before you label a binary options broker a scam. Credibility goes a long way in the financial trading world!